How much gold can you keep at home as per income tax rules? September 4, 2020 – Posted in: Blog
One of the oldest investment avenues is gold. Buying yellow metal is considered as a prized investment due to excellent liquidity, intrinsic value, and ability to protect against inflation and currency devaluation. Gold is also known as a safe haven as it gives high returns when economies and markets falter. With a strong and sustained rally, gold is breaking records almost every day, creating high interest among investors.
Indians love gold and our country is one of the largest consumers of gold in the World. Gold is purchased for various reasons like marriages, auspicious occasions, and just for the love of wearing it. Gold is considered to be one of the safest investment options available as it can be sold for cash when you are in urgent need. Gold does not mean only gold jewelry. It also includes gold coins, gold bars, and other forms of gold.
People purchase gold for various reasons, may it be for auspicious occasions, or for the love of wearing ornaments. On the other hand, gold also seems to be a favourite investment option for many people given the fact that there is no restriction on how much gold an individual can hold. Here, gold does not only mean jewelry, but it also includes gold coins, gold bars, and other forms.
Weddings are probably the single most important occasion wherein gold buying tops the charts in India. Be it in jewelry for the bride and the groom as the gold couple rings, ornaments for the close relatives, embossed coins as gifts for the elders of the family, or memorabilia in the forms of idols of gods and goddesses and other nifty items. Gifting or buying gold just comes as an excuse during the time of weddings.
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India’s infatuation with gold has been there for a long time and over the years it has only grown stronger. No wonder, Indians consume the most gold globally. Real estate and gold make up almost two-thirds of Indian household savings. For Indians, gold is considered more than an investment. Hence, it has found a significant place in their homes.
You may be plagued with different questions on investment on gold. All these questions assume importance in view of the government’s recent thrust on tracking unaccounted monies and investments.
1. SOURCE OF GOLD INVESTMENT
While buying gold, it is necessary that you take and retain your tax invoices for the purchase, be it jewellery or bullion.
According to tax experts, you do not have to worry if you can explain the source of investment in gold.
The Central Board of Direct Taxes (CBDT) has specified in its press release, dated 1st December 2016 that there is no limit on holding gold jewelry provided that the source of investment or inheritance can be explained.
However, there are separate limits for the unaccounted gold that men and women can keep at home.
However, it is essential that the income of the assessee is in line with the quantity of gold held. Providing necessary proof for such possession will help in avoiding scrutiny from the income tax department. Otherwise, the assessing officer also holds the authority to confiscate the gold held.
In the year 2016, CBDT had clarified the amount of gold you can hold. If you hold gold within this limit, it will not be seized even at the time of a search at your premises.
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ACCEPTABLE QUANTITY OF GOLD
The Income Tax Department will not seize jewelry and ornaments to the extent of 500 gms for a married lady, 250 gms for unmarried lady, and 100 gm for the male member, even if the same does not seem to be matching with the income record of the assessee.
For the storage of household gold, no justification is needed on one’s income status if the parameters mentioned for different categories of people such as individuals like married women, unmarried women, and a male member of the family are fulfilled.
If that individual person keeps gold beyond such limits at home then he/she should be able to explain the source of income from which the gold is being acquired.
It is important to note that the limits prescribed above apply only to jewelry held by members of the family. In the case of jewelry found belonging to any other person, the same can be seized and confiscated.
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2. WHAT KIND OF PROOF MAY BE REQUIRED?
Normally, the tax invoice issued by the jeweler is the best proof of your investment in gold. Apart from the tax invoice, you must have a separate proof in case of inheritance and gifts.
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In the case of inheritance or gifts, you must provide a receipt in the name of the initial owner of the item. You can submit a family settlement deed, WILL, or a gift deed stating the transfer of such a commodity.
3. PRECAUTIONS TO BE TAKEN
The above-mentioned quantity of gold is only applicable to individual taxpayers. If there is a single locker having jewels from multiple families, then the limit will be increased to the total of the limits for each individual taxpayer. In such cases, it is good to have a joint locker in the names of taxpayers from each family.
WHAT HAPPENS IF YOU KEEP GOLD BEYOND SUCH LIMITS AT HOME?
As long as you are able to provide the source of acquisition of gold or jewelry, there is no limit for holding gold jewelry or ornaments by anybody. In other words, if that individual person keeps gold beyond such limits at home then he/she should be able to explain the source of income from which the gold is being acquired.
In case, if the holding is in excess, one has to consider the source of income, proof of investment will help you in establishing the source of investment against your income tax return. Apart from the tax invoices that you would keep, it is a little tricky what kind of proof is necessary in case of inheritance and gifts. To specify more, experts suggest, in case of inheritance or gift, details like a gift deed or receipts with the name of the initial owner of the item may be needed, or one can produce a family settlement deed, Will, or a special gift deed stating the transfer of such item in the owner’s hand.
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